Inflation fears

Meanwhile, the British Chambers of Commerce (BCC) says that economic growth will remain anaemic over the next few years.

The business group, which represents thousands of small and medium-sized companies, says annual GDP growth will not exceed 1.5% by 2020 and inflation could end up being higher than expected.

The BCC expects inflation to average 2.9% this year and peak at 3.4% in the last three months of 2017, which it says will hit consumer spending.

The group raised its forecast for economic growth from 1.4% to 1.5% for this year, but expected GDP to increase by just 1.3% next year.

Adam Marshall, director-general of the BCC, said: "Over recent months, many of the businesses I speak to have expressed cautious optimism for their own prospects, but remain wary about the growth prospects of the UK economy as a whole.

"In the wake of an inconclusive general election, that wariness is set to increase."

The group has urged the government to spend more on infrastructure, particularly broadband and mobile phone connectivity, while it has described the UK's road network as sclerotic.

In May the Office for National Statistics said the economy expanded by 0.2% in the first three months of the year, down from its first estimate of 0.3%, as the key services sector lost momentum.